Why is Toyota right to resist investment funds asking it to adopt a Tesla-like all-electric strategy? And why isn’t Tesla wrong to prosecute her? With 227 billion dollars, Toyota is the second most capitalized car company on the stock exchange, followed by the Volkswagen group at 79. Values that fluctuate little, barring epochal events. Toyota before Covid danced for years just under 200 billion. VW came to lose a third of its value for the diesel-gate and the worst was feared but then, when it was clear that customers only paid attention to the quality of the products, the shares returned to congruous values. After all, these are large engineering companies full of plants, employees, patents, research, processes, with distribution systems and a consolidated customer base. They are valid for what they are and because everyone knows that over the years they may vary up or down, but not that much.
Number one is Tesla with 375 billion, which however was worth over a thousand billion a year ago and has lost 2/3 of its value. Again, a catastrophic event, a meteorite? But no, it’s just that analysts are thinking. Yes, sales are good, but the future looks less rosy than before. Then the installation of charging stations goes a little slow and it seems that customers won’t be jostling until the last one has gotten his hands on an electric car. Finally, the competition, as annoying as it is unpredictable, which offers electric cars. All known and ordinary things, it will be said. The fact is that they had never found the time and calm to think about it. Better late than never.
The real question is whether it is correct to equate Tesla with car makers. Twenty years ago it didn’t exist and in 2016, despite having accumulated only losses, it entered the world‘s top ten by capitalization and then climbed to over one trillion before collapsing: a rally! Whoever invests bets on a certain type of future and the game consists in intuiting, before the others, what it will be like as it gets closer. Someone becomes rich and the others remain with the match in hand. Investing in an engineering company that builds value on its industrial and commercial logic may not make you rich, but you won’t lose everything either.
What’s the point, since everyone does what they want with their money? The point is that, if Tesla and Toyota are not comparable and attract investors for different reasons and objectives, the success of one does not correspond to the failure of the other. As a corollary, investors are wrong to expect all manufacturers to adopt Tesla’s strategies. Toyota has the strength to resist pressure from Northern European investment funds. What do other metalworkers do?